By Silvia Antonioli and Clara Ferreira-Marques
LONDON Dec 19 (Reuters) – Global miner Anglo American
is considering selling its majority stake in the Amapa
iron ore operation in northern Brazil as it focuses on its
flagship Minas-Rio growth project further south, several
industry sources said.
Anglo bought control of the Amapa operation, which produces
both pellet and sinter feed, in 2008, as part of the $5.5
billion Minas-Rio acquisition from Brazilian billionaire Eike
Batista’s MMX.
An internal valuation has put the Amapa operation’s value at
up to $1.5 billion, meaning Anglo’s 70 percent holding would be
worth at least $1 billion, according to one of the industry
sources with direct knowledge of the matter.
“It is a small mine, it is not the best asset in the world.
It is in the Amazon and the logistics are difficult … They
would rather focus on Minas-Rio,” a second industry source said.
Another source familiar with the situation said the mine was
not scaleable and pointed to restrictions on Capesize vessels in
the Amazon port serving Amapa, limiting the amount of ore that
can be shipped at any one time and increasing freight costs.
Anglo American declined to comment on Monday.
Commercial production began in January 2010 and Amapa is
expected to produce 4.5 million tonnes in 2011, according to
Anglo American’s annual report — a fraction of Minas Rio’s
expected production of 26.5 million tonnes per year. Amapa
became profitable at the end of 2010, ahead of schedule.
Continued…
